The “Bond King”: Buy Gold, Not Bonds

Posted on September 10, 2012 by WashingtonsBlog

Bill Gross Says that Gold Holds Its Value, While – In an Era of Central Bank Money Printing- Paper Money Doesn’t

Bill Gross – the world’s pre-eminent bond fund manager, nicknamed the “Bond King” – is the boss at Pimco, the world’s largest bond fund, with $1.8 trillion dollars under management.

Gross told Bloomberg:

[There's] a diminished or dying cult of both bonds and stocks from the standpoint of a belief that they can return 10% ….

Gold can’t be reproduced.  It could certainly be taken out of the ground in an increasing rate but there’s a limiting amount of gold.

And there has been an unlimited amount of paper money over the past 20 to 30 years and now – in this period of central bank expansion where it’s QE1 or QE2, or whether it’s the LTROs of the ECB or this potential new program … then central banks are at their leisure to basically print money.

Gold is a fixed commodity that has a considerable store of value that paper money has not….

When a central bank starts writing checks and printing money in the trillions of dollars, it’s best to have something tangible that can’t be reproduced, such as gold.

***

Gold … is a better investment than a bond or a stock, which probably will  only return a 3 to 4 percent return over the next 5 to 10 years.

 

Gross doesn’t believe that gold is a crowded trade at this point.

See this for background.

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  • http://WBlog 70andOut

    So now Gross is a goldbug, and you gave him free advertising !

    • David H.

      You’re speaking in a negative tone, but what is your point? Someone’s a gold bug, and they got free advertising. Okay, what’s wrong with EITHER of those statements? Maybe you work for the fed?

      • http://WBlog 70andOut

        the obvious must have been too deep for you

        • Sam

          The obvious is that you are an idiot with nothing substantive to add to this conversation. Bill Gross is exactly correct.

        • Peter

          hm, it doesn’t take rocket science to realize what Bill Gross is sharing, and I salute his honesty and wisdom.

  • Ron Hughes

    The obvious is that in a few decades the fed has managed to devalue the dollar from $20 oz to
    $1735 oz.

  • Peter

    I applaud Bill Gross, whom I hold in high regards, to come out and promote a commodity whose business he is not even involved with! So rather than free advertising, it seems like Bill Gross, as usual, is being rather honest, which I certainly don’t take for granted.

  • http://None Arthur Hall

    I remember seeing Gross on the old Wall Street Week program with Louis Rukeyser. I don’t think the word gold was in his vocabulary at the time. I’m afraid if the gold price goes much higher the White House will issue another executive order confiscating as they did before. Not many people I know believe all the gold purported to be stored in Ft. Knox is actually there.

  • JOHNNY MCDANIEL

    WHY people are still buying US Treasuries which pay very little interest from a bankrupt government, when there are NUMEROUS bonds available in the market from companies that have pristine balance sheets, and pay two or three times as much as Treasuries, makes no sense what so ever…….!!!!!! Sheees…..

  • Jerry

    I don’t think PIMCO has ‘any’ financial link/benefit in promoting gold – so, I appreciate Bill Gross offering his apparent honest view on gold.

  • http://www.westcoastladybugs.com RUSS SMITH

    Hi!, Patrons Of Washington Blog Et Al:
    For the life of me I’m totally bumed out from reflecting upon the idea that some people are staying away from purchasing gold, because they fear it will be confiscated; when what do they think the gold being stored in OUR repository @ Fort Knox, Kentucky etc. represents anyway; gold that walked into the vault alone by itself? That gold in Fort Knox etc. has a long trail history from which it came; just to be conveniently stored for what? The gold miners of old worked hard to accumulate what is now stored and they NEVER asked for a government hand out for unemployment, food stamps or any other government assessment or bailouts either did they? They survived without modern day government backstops, giveaways, bailouts or subsidies. They worked and struggled just to get by in their search for real money out of the bowels of Mother Earth and their rewards have been unduly claimed by a rogue government bent upon suppressing OUR Middle Class Ameica via their inflation they choose to persue; instad of grabbing their own picks & shovels for working like the miners of old did to secure the prosperity of their posterity. The illicit bills to be paid they have created are being handed to us and our posterity but from money printing by machinery that doesn’t even require them to utilize an oil can of efforts to inslave the rest of us. They are accomplishing this with paper and ink fiat money that is fake without an oz. of real money involved in the entire field of monetary transactions between creditors and borrowes. To what end this will come today only God seems to know and He’s not talking. Time marches on towards whatever inevitable consequences?

    RUSS SMITH, CALIFORNIA (One Or The Broke States)
    resmith@wcisp.com

  • John

    What would motivate Bill Gross to make this statement? Simple, obvious truth perhaps?

    • B Caufman

      Gold is the way to go. FRN’s are worthless, which means that noone has been paid in years!
      We swap our labor for a check, take it to the bank and get worthless FRN’s in return.
      The private federal reserve and it’s private owners reap all the rewards for our toiling away
      for 8,12,16,20 hours a day, 5 and 6 days a week. We own nothing because we purchase with
      nothing of value and then register the titles and deeds with the corporation, which controls
      everything on God’s earth! What uneducated fools we are, living a dream(a FANTASY)!!!!!!!!

  • kkflash

    At the outset, so you can understand my point of view, let me disclose that I own a lot of gold/silver and related mining stocks in my portfolio (about 70%). Remember that gold, in and of itself, has relatively little value. Oh, it’s a great conductor of electricity, it’s highly maleable, and it’s pretty to look at, but all these great characteristics considered, it’s primary value still lies in its rarity, easy divisibility and the fact that it can’t be produced from thin air. It must be painstakingly extracted from the earth at great expense and risk. It is therefore a store of the value of all that investment and labor. In other words, gold makes great money. For eons, gold has been a medium of exchange that has been trusted nearly universally to purchase all manner of useful goods and services. Bill Gross is simply pointing out that the world is finally realizing that giving governments/central banks the power to create money at will is the same as giving them a license to steal. They buy things of real value in exchange for something that has no real value. Banks always want good collateral when they loan money, but when we loan them money, they offer no collateral, nothing tangible to back their promise to repay. The governments of the world have, for the most part, spent themselves into imminent bankruptcy by buying tangible goods and services using nothing more than promises. What they have promised to the providers of those goods and services is the future labor of its people, while simultaneously promising its people generous current and future benefits without equivalent productive labor. Both of these promises cannot possibly be kept, as they are contradictory, and mutually exclusive. It is the greatest lie ever told, and the people have believed it – until now. Gold, silver, and other tangible forms of money, will replace fiat money worldwide, when the lie is exposed for what it is – theft by counterfeiting. It’s inevitable. It’s imminent.

 

 

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